Another formula may improve chemistry

Now here’s a question. If Australia’s economic model is so brilliant, why is there not a rush by the rest of the developed world to adopt it?

Surely, when the G20 leaders gather in Mexico early next week confronted as they will be by the threat of a collapse in Europe and a global slide into deeper economic gloom, Australia should be the country they should be looking to for inspiration to turn their economies around.

Julia Gillard
, as the leader of the country with the fastest growing sophisticated Western economy now almost 10 per cent bigger than before the global financial crisis, surely should be the star turn in Mexico. Both Gillard and
Wayne Swan
proclaimed last week’s news of strong gross domestic product and employment growth as proof that Australia is the envy of the world, leading the way in dealing with the economic challenges of the post-GFC world.

But if Australia is leading, who is following? The reality that when he looks around and sees no one is clearly frustrating Swan. He lashed out at European leaders in a speech on Thursday, in effect accusing them of political cowardice. It was time, he said, that European leaders showed “some basic political courage" in dealing with the challenges they faced.

A senior European diplomat in Canberra, a little testily, said to The Australian Financial Review: “If European countries had the vast natural resources riches that Australia has, if we had China buying up as much as we could produce as fast as we could produce it, then we would happily follow Australia’s lead. But the trouble is, it’s a bit more complicated than that."

The European Union, the euro zone and the complex and opaque political and economic decision-making systems, which make the European economy such a difficult ship to steer, certainly pose vastly more complicated challenges for its leaders than are faced by Gillard and Swan.

The representatives of European governments based in Canberra these days are becoming used to be seen as representing what Australian political leaders and commentators increasingly regard as “failed states". The diplomatic communications channels between Canberra and Brussels and the major European capitals run hot with reports of the latest criticism of European ineptitude and leadership failure.

The tone of the criticism is increasingly harsh and on a level quite different to the strength of criticism of US economic leadership, despite its equally disastrous failings.

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Despite a diplomatic silence in public, Europe’s representatives in Australia are increasingly dismayed by the tone of the conversation – and about what they see is a fundamental lack of understanding in Australia (including in the Gillard government) of the origins of the so-called “European project".

But a European ambassador recently told me: “They [the critics] should be careful what they wish for. The European project grew from the blood-soaked soil of Europe after years of war in the first half of the 20th century. The EU and the euro were fundamentally political projects, driven by the belief that if the nations of Europe were bound together in a common European economy, that history would never be repeated.

“Anyone who fails to see the dangers of a return to the nationalism, xenophobia and even anti-Semitism of the past does not understand what is happening in Europe now."

Of course, it could be equally argued that those now so robustly urging Europe’s early 21st century political leaders to focus on reviving economic as well as financial stability do so precisely because they do see those dangers.

Whether this is the case with Gillard and Swan, though, is hard to say. Neither has couched their criticism of Europe’s leadership failures in these terms.

Yet Gillard in particular could adopt a much more sophisticated and, potentially, effective approach to using Australia’s “enviable" economic performance as a tool for influencing what is happening in Europe.

Gillard is one of only four female leaders of the member countries of the G20. Of the others, the stand-out leader is German Chancellor
Angela Merkel
– now consistently ranked as the world’s most powerful woman. Apart from the fact they will be sitting at the same table at the Mexico G20 summit, Gillard has a lot in common with Merkel. Both are career politicians, without children. Both come from humble backgrounds from which their rise has been a remarkable personal achievement. And both have won reputations for toughness, resilience and grace under pressure.

Since Gillard became Australia’s Prime Minister two years ago, she has been in Merkel’s company on several occasions at major summits. At the Chicago summit on Afghanistan last month, they had a bilateral meeting. Little has been said or written about the chemistry between them, which suggests there may not be much. Where Gillard has been pictured often in warm conversation with US President
Barack Obama
, whose company she clearly enjoys, there is nothing to suggest any interest in such a connection with Merkel.

Yet if there is a world leader other than Obama with whom Gillard should be seeking a connection, it is surely Angela Merkel.

Maybe there will be chemistry in Mexico. And maybe rather than shouting inaudibly from the other side of the world, Gillard can speak directly to Merkel and suggest that there is an alternative to brutal austerity that can work. Australia is the proof of it.